Sterling was the talk of the market yesterday with a 1.2615 high and extended the bearish momentum for the 10th consecutive sessions. Although the pair lost -47-pips as price action since yesterday, the pair successfully sustained the 1.25 handle and currently trading 1.2568 intraday. Overall, GBP/USD rallied 471-pis since the US Fed hike, till yesterday high, and the pair is preparing for additional bullish waves due to soaring US Dollar Index yesterday with 98.65 2017-fresh-lows.
On the other hand, UK demands a final departure politically and financially from the EU. Political is by PM May releasing article 50 on the 29th of March which will set a new course for UK, but before that, PM May met with Scottish PM Nicola Sturgeon. Sturgeon has called for a second Scotland independence referendum, against May's will, but the terror attack from last week has interrupted the tense relations between them both. After officially lunching the Brexit, the UK will have two years to negotiate new arrangements, after which it will no longer be subject to EU treaties.
On the financial level, The EU has to make up a budget gap once the Brexit becomes official. Britain's exit from the European Union indicates that one of the bloc's biggest economies will stop making donations to its budget. This arouses questions as to how long the UK will proceed to pay its share of the budget and how can the EU fill the blacnk once Britain has officially left. The UK has already said it will not pay a 60 billion euro ($64.73 billion) bill to departure the bloc – money that according to the EU would be used for the UK's share of commitments to the pensions of its workers and UK-based projects that have already received funding approval. At the same time, some member states have already told Brussels that the UK are not willing to pay more into the EU budget to compensate for the UK's divorce. (CNBC)
Fundamentals:
1- USD - Goods Trade Balance today at 1:30 PM GMT.
2- USD- CB Consumer Confidence today at 3:00 PM GMT.
Technical :
Trend : Bullish Sideways
Resistance levels: R1 1.2598, R2 1.2640, R3 1.2682
Support levels : S1 1.2531, S2 1.2462, S3 1.2392
Remark : Given the current situation of pale greenback trading 98.96, and GBP/USD significant rallies Sterling has the upper hand which supports the pair's bullish forces. Closing above R1 restores confidence for Sterling and the pair has the tendency to climb to R2 level. On the other hand, stalling below S1 will increase further selloffs and wash towards S2 level signaling a beginning for trend reversal. Closing below S2 is a confirmation that bearish forces has taken control and market to consider GBP/USD bearish with a reminder that the pair collapses intensively on psychological level. Political issues such as article 50 and Scottish referendum are vital for Sterling levels on the fundamental level.
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